rci banque · rci is a captive finance company and a wholly owned subsidiary of the french auto...
TRANSCRIPT
FINANCIAL INSTITUTIONS
CREDIT OPINION14 February 2018
Update
RATINGS
RCI BanqueDomicile France
Long Term Debt Baa1
Type Senior Unsecured - FgnCurr
Outlook Positive
Long Term Deposit Baa1
Type LT Bank Deposits - FgnCurr
Outlook Positive
Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.
Contacts
Yasuko Nakamura +33.1.5330.1030VP-Sr Credit [email protected]
Laurent Le Mouel +33.1.5330.3340VP-Senior [email protected]
Pierre-AlexandreGermont
+44.20.7772.1638
Associate [email protected]
Alain Laurin +33.1.5330.1059Associate [email protected]
Nick Hill [email protected]
RCI BanqueUpdate following the change of outlook to positive
SummaryRCI Banque's (RCI) Baa1 long-term deposit and senior unsecured debt ratings reflect (1) thebank's baa3 Baseline Credit Assessment (BCA) and Adjusted BCA; and (2) two notches ofuplift under our Advanced Loss Given Failure (LGF) analysis, stemming from the large volumeof senior long-term debt. The outlooks on the long-term deposit and senior unsecured debtratings are positive, which is in line with the positive outlook on the parent company RenaultS.A. (Renault; Baa3, positive).
RCI's BCA of baa3 is supported by the bank's role as a strategic captive for Renault andits sound risk management and financial fundamentals. Earnings streams are high andstable, credit losses on its retail and corporate exposures are low, and capitalisation iscommensurate with the bank's risk profile.
At the same time, the BCA is constrained by the bank's lack of business diversification andlarge exposures to car dealers. Moreover, we factor in RCI's high reliance on confidence-sensitive wholesale funding, although somewhat mitigated by the absence of maturitytransformation and the collection of online deposits which represent one-third of the bank'sfunding.
Exhibit 1
Rating Scorecard - Key financial ratios
2.1% 16.1% 1.5% 54.5% 7.0%
0%
10%
20%
30%
40%
50%
60%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Asset Risk:Problem Loans/
Gross Loans
Capital:Tangible Common
Equity/Risk-WeightedAssets
Profitability:Net Income/
Tangible Assets
Funding Structure:Market Funds/
Tangible BankingAssets
Liquid Resources:Liquid Banking
Assets/TangibleBanking Assets
Solvency Factors (LHS) Liquidity Factors (RHS)
RCI Banque (BCA: baa3) Median baa3-rated banks
So
lve
ncy F
acto
rs
Liq
uid
ity F
acto
rs
Source: Moody's Financial Metrics
THIS REPORT WAS REPUBLISHED ON 15 FEBRUARY 2018 WITH UPDATED EXHIBIT 3.
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
RCI's strategic role within the Renault/Nissan Alliance results in its standalone creditworthiness being closely tied to the strengths/weaknesses of its parent, Renault. So far, Renault and Nissan Motor Co., Ltd. (A2 stable) have demonstrated a high degree of resilienceto macroeconomic pressures despite the cyclical nature of the car market, which, in turn, is protective of RCI's creditworthiness.
We assign a Counterparty Risk (CR) Assessment of A3(cr)/Prime-2(cr) to RCI.
Credit strengths
» RCI is essential to its parent's strategy.
» The bank's asset risk is moderate.
» Adequate capitalisation supports the bank's risk profile.
» RCI has maintained strong profitability through the credit cycle.
» The bank has limited refinancing risk, an increasing deposit base and an adequate liquidity buffer.
Credit challenges
» RCI's risk profile remains high mainly because of its captive status and lack of business diversification.
» The car market is cyclical by nature.
» RCI has some credit concentrations among car dealers.
» RCI is reliant on wholesale funding.
Rating outlookRCI's deposit and senior unsecured debt ratings carry a positive outlook, in line with the positive outlook on the parent company,Renault.
Factors that could lead to an upgrade
» Given the high support assumption, RCI's Adjusted BCA could be upgraded owing to an upgrade of its parent, Renault. RCI's BCAcould be upgraded following (1) a material reduction in its reliance on wholesale funding; or (2) any material improvement in assetquality or solvency. We believe that the BCA of a financial captive (that is, RCI's BCA) is unlikely to exceed the carmaker's rating(that is, Renault's rating) by more than one notch.
» An upgrade of the BCA or the Adjusted BCA would likely prompt an upgrade of the bank's deposit and senior unsecured ratings.Under our Advanced LGF analysis, the long-term and short-term deposit and senior unsecured debt ratings could be improved bythe significant issuance of subordinated instruments, which we do not expect in the short term.
Factors that could lead to a downgrade
» A downgrade of RCI's ratings could materialise if (1) the parent's rating is downgraded by more than one notch, which is unlikely,given the positive outlook; or (2) the bank's credit fundamentals deteriorate.
This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.
2 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
Key indicators
Exhibit 2
RCI Banque (Consolidated Financials) [1]6-172 12-162 12-152 12-142 12-133 CAGR/Avg.4
Total Assets (EUR million) 47,548 43,320 37,073 32,023 29,505 14.65
Total Assets (USD million) 54,231 45,692 40,272 38,750 40,656 8.65
Tangible Common Equity (EUR million) 4,281 3,976 3,384 3,048 2,815 12.75
Tangible Common Equity (USD million) 4,883 4,194 3,676 3,688 3,879 6.85
Problem Loans / Gross Loans (%) 1.3 1.5 2.5 3.0 3.5 2.36
Tangible Common Equity / Risk Weighted Assets (%) - 16.1 15.9 15.9 12.9 16.07
Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) 11.0 12.8 19.9 23.2 26.7 18.76
Net Interest Margin (%) 2.7 2.7 3.0 3.1 3.2 2.96
PPI / Average RWA (%) - 4.4 4.6 4.1 3.9 4.47
Net Income / Tangible Assets (%) 1.5 1.4 1.5 1.4 1.7 1.56
Cost / Income Ratio (%) 30.9 31.4 31.5 35.1 31.4 32.16
Market Funds / Tangible Banking Assets (%) 55.9 54.5 55.7 60.9 66.6 58.76
Liquid Banking Assets / Tangible Banking Assets (%) 8.4 7.0 9.3 6.2 6.2 7.46
Gross Loans / Due to Customers (%) 295.0 296.3 300.1 402.5 530.7 364.96
[1] All figures and ratios are adjusted using Moody's standard adjustments. [2] Basel III - fully-loaded or transitional phase-in; IFRS. [3] Basel II; IFRS. [4] May include rounding differencesdue to scale of reported amounts. [5] Compound Annual Growth Rate (%) based on time period presented for the latest accounting regime. [6] Simple average of periods presented for thelatest accounting regime. [7] Simple average of Basel III periods presented.Source: Moody's Financial Metrics
ProfileRCI adopted its current name in 2002. Previously named Renault Crédit International, RCI became the sole shareholder of Diac SA(founded in 1924) and obtained its banking licence in 1991.
RCI is a captive finance company and a wholly owned subsidiary of the French auto manufacturer Renault. The bank provides salesfinancing for Renault Group's brands (Renault, Renault Samsung Motors and Dacia) worldwide and for Nissan Group's brands (Nissan,Infiniti and Datsun) mainly in Europe and South America. As of 30 June 2017, the bank operated commercially in 36 countries, dividedinto five major world regions: Europe, the Americas, Africa-Middle East-India, Eurasia and Asia-Pacific.
For new vehicles (cars and light utility vehicles) registered by Renault and Nissan worldwide, RCI reported a 38.2% financingpenetration rate in the first half of 2017. As of the end of June 2017, the bank reported a consolidated balance sheet of €47.5 billion.
Since RCI is chartered as a bank, it has to comply with all European regulations (Capital Requirement Directive — CRD4, CapitalRequirement Regulation - CRR, and Bank Recovery and Resolution Directive - BRRD). The bank has been supervised by the EuropeanCentral Bank since January 2016 because it is considered a significant institution. In February 2016, RCI adopted a new commercialname, RCI Bank and Services.
Detailed credit considerationsRCI is a key vehicle for the strategy of its industrial parent, RenaultRCI is a wholly owned captive finance company that supports the sales of the Renault/Nissan Alliance by offering auto loans tocustomers (both individual and corporates) and loans to dealers to help them finance their inventories. RCI also offers related servicessuch as maintenance, insurance and roadside assistance, etc. Lastly, the bank collects deposits through online savings accounts inFrance, Germany, Austria and the UK with a view to diversifying its funding.
Loans to retail customers and to corporate clients excluding dealers, (€31 billion as of the end of June 2017) can also take the formof long-term leases. Leases are almost exclusively finance leases (€9.8 billion as of the end of June 2017) and to a much lesser extentoperating leases (€0.8 billion as of the end of June 2017). Given that the bulk of the residual value risk is borne by its parent company,the residual value risk at the level of RCI was limited to €1.9 billion as of year-end 2016.
3 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
Although ancillary products and services, such as insurances, warrantee extensions and maintenance contracts, have been developedin recent years to improve customer loyalty and boost revenues, we believe they do not materially enhance the bank's diversification,which remains mainly focused on existing customers of the Renault/Nissan Alliance car brands.
Asset risks are moderate, despite some concentrations among car dealersAs of June 2017, RCI's problem loans to customers represented 1.3% of gross loans (December 2016: 1.5%). This portfolio remained wellprovisioned, with specific loan-loss reserves accounting for 96% of problem loans as of the end of June 2017 (including impairmentallowances on non-impaired loans and collective provisions). We believe RCI's customer base is relatively risky and high provisions havebeen sustained over time; RCI experienced a sharp deterioration in asset quality during the recession, notably in Spain and Romania,before continuously improving since 2010. In H1 2017, the bank’s cost of risk was 29 basis points (bps) of average outstanding loans, aslight decrease from 31 bps in 2016.
One of RCI's main risks is the lack of business diversification because it is a captive specialised institution. As such, a downturn insales volumes of Renault/Nissan Alliance brands would likely result in lower origination volumes and, therefore, lower revenues. Thedownturn would also result in relatively high credit risk concentration towards car dealers, which represented 25% of the bank's loanbook of €42 billion as of the end of June 2017. Although we recognise that this portfolio, which comprises a large number of borrowers,has performed well in the past, we believe these exposures constitute a quasi single risk, given the degree of correlation among cardealers' performance, in particular during a downturn.
Exhibit 3
Credit risk towards car dealers represents 25% of RCI's loan bookLoan book mix as of the end of December 2016 — end-user customers and car dealers (€ billion)
0
2
4
6
8
10
12
14
France Germany United Kingdom Spain Italy Other Europeancountries
Asia Pacific -South Korea
Brazil Argentina Africa, MiddleEast, India
Eurasia
€b
illio
n
Customer Outstandings Dealer Outstandings
Source: RCI Banque’s annual report 2016
Adequate capitalisation supports the bank's risk profileRCI reported a Common Equity Tier 1 capital ratio of 14.6% on a phased-in basis as of the end of June 2017 versus 15.7% as of year-end2016. We believe that RCI’s economic solvency is adequate, given its risk profile. This solvency is reflected in our assigned Capital scoreof a1.
RCI has maintained strong profitability despite the cyclical nature of the car marketRCI consistently generated a comfortable net banking income that exceeded 4% of average performing assets over the past five years(4.4% in H1 2017). The resilience of the bank's net interest income, representing around 70% of its net banking income, stems fromprofitable car-financing activities (including packaged products, which are less price sensitive than plain-vanilla loans), containedfunding costs and the fact that RCI seeks to pass any increases in funding costs onto customers. The relatively long-term nature of thecar-financing contracts mitigates to some extent the effects of the car market cycles and reduces income volatility. The net interestmargin (around 2.7% of average interest-bearing assets) has slightly decreased in H1 2017, primarily owing to a small reduction in theshare of higher margin markets (primarily America) in RCI's car-financing portfolio.
4 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
RCI also has good cost efficiency, owing to its low fixed cost basis, accounting for around 1.3% of its average performing assets andresulting in a cost-to-income ratio of around 31% as of the end of June 2017. This high cost efficiency reflects the fact that RCI benefitsfrom various services provided by Renault (for example, distribution channels), as well as from the group's marketing initiatives.
RCI is reliant on wholesale funding, a credit weakness, partly mitigated by limited refinancing risk, an increasing depositbase and an adequate liquidity bufferRCI is mainly wholesale funded, making it vulnerable to sudden changes in investor confidence. Restricted market access could lead tohigher funding costs, which would constrain loan origination. This would in turn affect the strength of RCI's franchise and ultimatelyreduce its earnings generation, particularly if any funding constraints coincided with higher loan impairments. Our assigned combinedLiquidity score of b1 reflects the relative weakness of the bank's funding and liquidity for the rating.
However, we recognise that RCI (1) strives to match its assets and liabilities, thereby limiting maturity transformation and refinancingrisk; and (2) has access to considerable liquidity, principally in the form of committed bank credit lines to bridge any mismatches ortemporary market access restrictions.
Positively, the bank (1) receives very limited funding from Renault Group, and (2) has started collecting internet deposits from retailcustomers in 2012, which currently account for around one-third of net outstanding loans, at the level targeted by RCI.
Exhibit 4
RCI increasingly funds itself with online retail depositsFunding sources % total funding (June 2017)
Bonds & EMTN42%
Sight Deposits25%
Term Deposits9%
Securitisation7%
Central Banks6%
Banks & Schuldschein5%
Negotiable Debt Securities4%
Renault Group2% Others
0%
Source: RCI Banque’s H1 2017 business report
RCI claims to have a funding surplus because it finances its loan book with longer-term liabilities, resulting in little refinancing risk.
The bank has been able to issue debt of various maturities on the markets on a number of occasions in the past couple of years and indifferent currencies. We also take comfort from the geographical diversification of the resources and investors.
Securitisation is used both for funding purposes and to increase asset liquidity. As of year-end 2016, securitisation represented 8% ofthe bank's funding. RCI still has a sizeable pool of securitisable assets available. In a stress scenario, RCI should, therefore, be able toincrease its recourse to securitisation to make its balance sheet more liquid and create European Central Bank-eligible assets.
In its 2017 half-year report, RCI stated that its €9.2 billion available liquidity would allow it to carry out its commercial businessactivity for 12 months in a stressed liquidity scenario namely without being able to access the unsecured public funding markets. Inthis shutdown scenario, it would use its €4.1 billion available confirmed lines of credit, which we believe could be subject to changes inavailability and pricing.
Our Funding Structure score of b2 reflects the bank's large dependence on market funding.
RCI's BCA is supported by its Strong Macro ProfileRCI's operating environment is heavily influenced by that of European countries and its Macro Profile is in line with the EU's averageMacro Profile of Strong.
5 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
Overall, our assigned BCA is baa3, which, similarly to the other captive auto-banks, includes a one-notch negative adjustment to RCI'sFinancial score for lack of business diversification because the bank is only involved in auto loans to end users and dealers.
Support and structural considerationsAffiliate supportWe believe that RCI benefits from a high probability of support from its parent, Renault. This view is underpinned by the bank'sstrategic importance to the car manufacturer. RCI is a wholly owned subsidiary of Renault and is fully integrated into its strategy. RCIfinances more than 38% of new vehicles registered by Renault Group's brands, which highlights the critical importance of a financialcaptive as a means of facilitating car sales. RCI also plays a capital role for Renault through the financing of its dealers' network.
To date, RCI's ratings have not benefited from any affiliate support uplift from Renault because Renault's rating was at the same level asRCI's BCA. If Renault's rating was to be upgraded by one notch as a follow-up to the positive outlook assigned on 15 January 2018, thecontinued assumption of a high probability of support would result in one notch of affiliate support uplift. This prompted our decisionto revise the outlook on RCI's ratings to positive.
LGF analysisOur Advanced LGF analysis applies to RCI, given that the bank is subject to an operational resolution regime under the Bank Recoveryand Resolution Directive, which was transposed into French law on 20 August 2015.
In accordance with our methodology, we, therefore, apply our LGF analysis, considering the risks faced by the different debt anddeposit classes across the liability structure should the bank be put on resolution. We assume residual tangible common equity of3% and losses post-failure of 8% of tangible banking assets, a 25% runoff in junior deposits and a 5% runoff in preferred deposits,and assign a 25% probability to deposits being preferred to senior unsecured debt. These are in line with our standard assumptions.In addition, we apply a proportion of 10% of deposits considered junior, given that the deposit base is predominantly constituted ofonline retail deposits.
Under these assumptions, RCI's deposits and senior unsecured debt are likely to face a very low loss given failure, owing to the lossabsorption provided by the large amount of senior unsecured debt. This results in a two-notch LGF uplift from the BCA for bothdeposits and senior unsecured debt.
Government supportWe expect a low probability of government support for debt and deposits, resulting in no uplift for both the long-term deposits andsenior unsecured debt issued by the bank.
Counterparty Risk (CR) AssessmentCR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt anddeposit ratings in that they (1) consider only the risk of default rather than both the likelihood of default and the expected financial losssuffered in the event of default, and (2) apply to counterparty obligations and contractual commitments rather than debt or depositinstruments. The CR Assessment is an opinion of the counterparty risk related to a bank's covered bonds, contractual performanceobligations (servicing), derivatives (for example, swaps), letters of credit, guarantees and liquidity facilities.
RCI's CR Assessment is positioned at A3(cr)/Prime-2(cr)The CR Assessment, prior to government support, is positioned three notches above the Adjusted BCA of baa3, based on the bufferagainst default provided to the senior obligations represented by the CR Assessment by subordinated instruments, amounting to 41%of tangible banking assets. The main difference with our Advanced LGF approach used to determine instrument ratings is that the CRAssessment captures the probability of default on certain senior obligations, rather than expected loss; therefore, we focus purely onsubordination and take no account of the volume of the instrument class.
6 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
Rating methodology and scorecard factors
Exhibit 5
RCI BanqueMacro FactorsWeighted Macro Profile Strong 100%
Factor HistoricRatio
MacroAdjusted
Score
CreditTrend
Assigned Score Key driver #1 Key driver #2
SolvencyAsset RiskProblem Loans / Gross Loans 2.1% a3 ← → a3 Sector concentration Long-run loss
performanceCapitalTCE / RWA 16.1% aa3 ← → a1 Risk-weighted
capitalisationProfitabilityNet Income / Tangible Assets 1.5% a3 ← → a3 Earnings quality Return on assets
Combined Solvency Score a2 a2LiquidityFunding StructureMarket Funds / Tangible Banking Assets 54.5% b3 ← → b2 Extent of market
funding relianceTerm structure
Liquid ResourcesLiquid Banking Assets / Tangible Banking Assets 7.0% b1 ← → ba2 Access to
committed facilitiesCombined Liquidity Score b2 b1Financial Profile baa2
Business Diversification -1Opacity and Complexity 0Corporate Behavior 0
Total Qualitative Adjustments -1Sovereign or Affiliate constraint: Aa2Scorecard Calculated BCA range baa2-ba1Assigned BCA baa3Affiliate Support notching --Adjusted BCA baa3
Balance Sheet in-scope(EUR million)
% in-scope at-failure(EUR million)
% at-failure
Other liabilities 11,602 27.4% 12,605 29.7%Deposits 14,320 33.8% 13,318 31.4%
Preferred deposits 12,888 30.4% 12,244 28.9%Junior Deposits 1,432 3.4% 1,074 2.5%
Senior unsecured bank debt 15,211 35.9% 15,211 35.9%Preference shares (bank) 12 0.0% 12 0.0%Equity 1,273 3.0% 1,273 3.0%Total Tangible Banking Assets 42,418 100% 42,418 100%
7 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
De Jure waterfall De Facto waterfall NotchingDebt classInstrumentvolume +
subordination
Sub-ordination
Instrumentvolume +
subordination
Sub-ordination
De Jure De FactoLGF
NotchingGuidance
vs.Adjusted
BCA
AssignedLGF
notching
Additionalnotching
PreliminaryRating
Assessment
Counterparty Risk Assessment 41.4% 41.4% 41.4% 41.4% 3 3 3 3 0 a3 (cr)Deposits 41.4% 3.0% 41.4% 38.9% 2 3 2 2 0 baa1Senior unsecured bank debt 41.4% 3.0% 38.9% 3.0% 2 2 2 2 0 baa1Dated subordinated bank debt 3.0% 3.0% 3.0% 3.0% -1 -1 -1 -1 0 ba1
Instrument class Loss GivenFailure notching
AdditionalNotching
Preliminary RatingAssessment
GovernmentSupport notching
Local CurrencyRating
ForeignCurrency
RatingCounterparty Risk Assessment 3 0 a3 (cr) 0 A3 (cr) --Deposits 2 0 baa1 0 Baa1 Baa1Senior unsecured bank debt 2 0 baa1 0 Baa1 Baa1Dated subordinated bank debt -1 0 ba1 0 (P)Ba1 --Source: Moody's Financial Metrics
Ratings
Exhibit 6Category Moody's RatingRCI BANQUE
Outlook PositiveBank Deposits Baa1/P-2Baseline Credit Assessment baa3Adjusted Baseline Credit Assessment baa3Counterparty Risk Assessment A3(cr)/P-2(cr)Senior Unsecured Baa1Subordinate MTN -Dom Curr (P)Ba1Commercial Paper P-2Other Short Term -Dom Curr (P)P-2
PARENT: RENAULT S.A.
Outlook PositiveIssuer Rating Baa3Senior Unsecured -Dom Curr Baa3Commercial Paper -Dom Curr P-3Other Short Term -Dom Curr (P)P-3
BANCO RCI BRASIL S.A.
Outlook StableBank Deposits -Fgn Curr Ba3/NPBank Deposits -Dom Curr Ba1/NPNSR Bank Deposits Aaa.br/BR-1Baseline Credit Assessment ba3Adjusted Baseline Credit Assessment ba1Counterparty Risk Assessment Baa3(cr)/P-3(cr)
RCI BANQUE SUCURSAL ARGENTINA
Outlook StableIssuer Rating -Dom Curr Ba2
ROMBO COMPANIA FINANCIERA S.A.
Outlook StableCorporate Family Rating Ba3NSR Corporate Family Rating Aa1.arSenior Unsecured -Dom Curr Ba3NSR Senior Unsecured Aa1.ar
Source: Moody's Investors Service
8 14 February 2018 RCI Banque: Update following the change of outlook to positive
MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS
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Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion asto the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be recklessand inappropriate for retail investors to use MOODY’S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or otherprofessional adviser.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it feesranging from JPY200,000 to approximately JPY350,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.
REPORT NUMBER 1110872
9 14 February 2018 RCI Banque: Update following the change of outlook to positive
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Yasuko Nakamura +33.1.5330.1030VP-Sr Credit [email protected]
Laurent Le Mouel +33.1.5330.3340VP-Senior [email protected]
Pierre-AlexandreGermont
+44.20.7772.1638
Associate [email protected]
Alain Laurin +33.1.5330.1059Associate [email protected]
Nick Hill [email protected]
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10 14 February 2018 RCI Banque: Update following the change of outlook to positive